The sayings "as January goes, so goes the year" and "sell in May and go away" do not predict market moves, but they do help explain the concept of stocks' seasonality. Here's how traders can look for possible seasonal stock trends using Schwab's thinkorswim® trading platform.
To get started, log in to the thinkorswim desktop app.
Ready
Source: thinkorswim® desktop platform for Mac.
Step 1
From Charts, enter the ticker of the stock you're researching in the search box.
Step 2
Once the chart has populated, click the Charts gear icon to open Chart Settings.
Set
Source: thinkorswim® desktop platform for Mac.
Step 3
In Chart Settings, click Appearance. Next to Chart Mode, click Standard to select Seasonality in the drop-down menu.
Step 4
From the Display drop-down, choose from:
- Yearly, which displays year-to-date performance plus the past five years of performance.
- Average, which displays year-to-date performance plus the average performance over the past five years.
- Yearly + Average, which displays year-to-date performance, the past five years of performance, and the average performance over the past five years.
Tip:
To view different time frames, click Ⓐ Time axis and select a new Time interval.
Step 5
If desired, adjust the colors for the Current year and Average lines on the chart. You can also choose to Highlight seasons or Highlight earnings to make seasonal patterns easier to identify.
Step 6
Under Common, you can further customize the look of your chart's background, cursor, and volume displays.
Tip:
Depending on your needs and preferences, you can refine your seasonality chart within Chart Settings by:
- Customizing the axis: If you'd like all the lines to have the same point of origin—which can make it easier to spot trends—under Ⓑ Price axis, select Display: Show as a percentage and Show bubbles as percentage.
- Displaying available corporate actions: To add earnings, earnings calls, and dividends, under Ⓒ Equities, select Show corporate actions.
Step 7
When satisfied with your selections, click OK to apply the changes and view your chart.
Go
Source: thinkorswim® desktop platform for Mac.
In this example, a hypothetical company's 5-year average (red line) shows that in the past the stock price had tended to increase in December and January, and again throughout most of the summer. Although seasonality, like other technical trading concepts, is not predictive, a trader who believes the stock will continue in this vein might choose to open positions early on in these two cycles and close them out before their historical dips.
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The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.
All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.
Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.
Investing involves risk, including loss of principal.
Schwab does not recommend the use of technical analysis as a sole means of investment research.